Chinese Exec Who Controls Stan Lee's POW! Suspected of Sprawling Fraud
Chinese authorities detained Camsing International founder and chairwoman Lo Ching, leading the company's stock to drop.
Camsing International, the Chinese company that acquired the late Stan Lee's Pow! Entertainment in 2017, saw its shares crash nearly 90 percent earlier this week after its founder and chairwoman Lo Ching was detained by Chinese authorities. On Wednesday, the suspected reasons behind Lo's arrest began to emerge.
According to local reports, the businesswoman is suspected of being involved in a sprawling chain of financial fraud involving several major Chinese financial institutions and e-commerce companies.
Camsing Global, the parent company of Camsing International, is believed to have issued more than $500 million (several billion yuan) worth of financial products by using reported pending revenue from e-commerce giants JD.com and Suning.com as backing. The two e-commerce companies, however, have alleged that Camsing falsified business contracts and that the products backed by Camsing are in danger of default.
Camsing operates various business lines in the media and entertainment sector, including a theme park in southern China and a movie merchandising business that sells branded products based on Hollywood IP, such as Transformers and Kung Fu Panda.
The company made its first major international entertainment acquisition in 2017, buying Stan Lee's Los Angeles-based company POW! Entertainment for an undisclosed sum. The two companies have since been developing various film and television projects based on the late Marvel maestro's original characters, which have a strong fan base in China. In October, Camsing held a three-day Comic-Con-like event in China called "Stan Lee Comic Universe Shanghai."
The case that has ensnared Lo appears to be rapidly widening, as Shanghai police have now detained more than 10 employees from Camsing Global, as well as a staffer from leading Chinese wealth management firm Noah Holdings, which was involved in issuing some of the financial products for Camsing.
Noah reportedly contacted the police after it detected risks from products linked to Camsing Global in May, sources close to the wealth firm told Chinese business news outlet Caixin. Noah is said to have undertaken an internal investigation and requested meetings with Lo after Camsing made "suspicious account changes and requested an increase in a fundraising amount." When the investigation failed to resolve the company's worries, it went to the police.
JD.com and Noah have since traded accusations over who is responsible for the failure of oversight that opened the door for Camsing's alleged multi-hundred-million-dollar fraud. Noah said Tuesday that it filed a lawsuit against Camsing Global and JD.com for alleged supply chain financing fraud.
"We are shocked that this occurred and have been cooperating with the police on this issue," JD.com said Tuesday in a statement. The firm said it never received verification requests from Noah regarding the financing of Camsing's financial products, placing the blame on Noah for "risk control flaws."
According to Caixin, most of Camsing's financial products in question are ultimately guaranteed by Lo's personal assets. But the news service says that public records reveal that her assets total less than $5.8 million (40 million yuan), including her properties, vehicles and bank deposits.
Camsing International's shares fell a further 15 percent Wednesday in the wake of Caixin's bombshell report. The company's shares are now down 91 percent from a week ago, with the company's market capitalization being down $700 million.
Following news of Lo's arrest Monday, POW! Entertainment released the following statement:
“Stan Lee’s POW! Entertainment is one of many subsidiaries of Camsing International Holdings. We have been and will continue to be an independent operating unit with a separate and autonomous U.S.-based management team. The news today is disturbing to us but will in no way impede our single-minded dedication to our mission as the guardian of the legacy of our founder Stan Lee, the greatest storyteller of our time. POW! will continue along with creative partners on its many existing and future projects to assure the memory and artistry of Stan Lee will live on for generations to come.”